Study: Leading brands aren't always enduring

Brand leadership brings many benefits, but a new study of more than 650 products in 100 categories shows that without consistent marketing support, longevity isn't one of them.

The study by Peter Golder, associate professor of marketing at New York University's Stern School of Business, raises serious questions about whether top brands can maintain their leadership for prolonged periods.

"Many companies, especially the new Internet companies, are basing their marketing strategies on the idea that capturing brand leadership is the key to maintaining leadership in that category for a long time," Mr. Golder said. "What I've found is that leading brands are more likely to fail than maintain their leading position."

1923 STUDY

Mr. Golder re-examined a 1923 benchmark NYU study of top brands in 100 product categories, and found that 23 were still market leaders in 1997. Previous research based on the same study found a much higher percentage of brands maintaining their market leadership over time. However, Mr. Golder said those studies, often quoted by marketing executives, focused on select product groups, which biased the conclusions.

Previously, he said, studies concluded that 19 of 25 leading brands from 1923 maintained their leadership position for at least six decades. But the original 1923 study, he said, was actually done on 100 categories. The sample of 25 categories was selectively chosen to demonstrate longterm leadership, resulting in an overstatement of the ability of leading brands to maintain their leadership.

In his new research, Mr. Golder compared the leading brands of 1923 with 1997's leaders in all 100 categories to establish the actual percentage of former leaders that have maintained leadership and to determine the stability of market shares of leading brands over time.

Mr. Golder found:

* More of the leading brands in 1923 failed (28%) by 1997 than remained leaders (23%).

* More of the top three brands in 1923 failed by 1997 than remained among the top five.

* Market shares over this prolonged period are not stable.

* The category of clothing and fashion had no brands that maintained leadership, and 67% of former leaders had failed.

* The category of food and beverages has 39% of brands that maintained leadership and only 21% of former leaders that failed.

BRANDS DECLINE EVERY DAY

"The findings of the study are not surprising, because what we're seeing more and more is that the brand, any brand, declines in value every day, whether it's from customers moving on or new products coming in the market," said Don E. Schultz, professor of integrated marketing communications at Northwestern University. If you don't invest in the brand as an asset like anything else, just like you would a factory, then you are going to lose market share and leadership. You have to maintain and replenish a brand or over time, it will die."

One category leader that has done that well since the first NYU study is Wm. Wrigley Jr. Co. The company has dominated chewing gum in the last nine decades. In 1923, Wrigley already had sold the leading brand for more than 10 years and was one of the strongest brands in the 1923 study of market leaders.

Unlike its main competitor, American Chicle Co., now Adams USA, which tended to maximize profits by minimizing marketing expenses, Wrigley invested in building its brands, was careful about the equity of those brands and did not extend the brand "until they knew they had a winner. They didn't want to dilute the brand too thinly," Mr. Golder said.

WRIGLEY CO.

Wrigley's success is primarily based on maintaining and building strong brands, focusing on a single product and being in a category that has not changed much.

Typewriters, however, is a prime example of a category where leadership has not been maintained. Underwood Typewriter Co. had a leading brand in 1923, but over the next three decades, the company was unwilling to adopt new technologies, including the introduction of electric typewriters. "Underwood's demise demonstrates the importance of continuous innovation," Mr. Golder said.

Fashion is another category where 1923's leaders failed to hold onto those leadership positions.

"Here the issue is clothing, and fashion brands don't cross generations as easily," Mr. Golder said. "Nike and Levi's are successful brands, and they can still do well. But the simple fact is if your parents are wearing Nike's and Levi's, the kids aren't going to want to. Fashion is related to technology in that it changes quickly and it becomes harder to keep up over time."

"Many brands have this expectation that once they have a customer locked up, they have that customer forever, and I think that the recent history of computer software alone shows that people are willing to go through a reasonable amount of cost to switch to new software if that new software is proven to be better," he said. "And memory is selective. While we remember brands that have been leaders for many years, we tend to forget all of the other leading brands that have failed along the way."

To maintain leadership and market share over time, marketing executives agree that products need to evolve and remain relevant to today's consumer.

`FEELING OF INERTIA'

"Too often, once a product has attained a leadership position, there's a feeling of inertia and a tendency to keep repeating the same message and not fixing what's not broken," said Allen Adamson, managing director of Landor Associates, the brand and marketing consultancy of Young & Rubicam. "So often, brands lose their lead because of this, but it doesn't have to be, if marketers stay on top of what their brand's promise is all about."

Maintaining brand leadership over time "is a game of evolution. You don't just sit on past glory," said Jack Trout, president of Trout & Partners, a marketing strategy company. "There's no guarantee that once you get to the top of the heap that you're there forever.

"Just look at [Procter & Gamble's] Crest toothpaste. They had the leadership position based on fluoride. As the years rolled by, baby boomers grew up and outgrew cavity protection. Colgate-Palmolive stepped in with a toothpaste, [Colgate] Total, that addressed those needs. They evolved, and Crest did not. Now look who's on top."

If anything, Mr. Golder's study "is a wake-up call" to companies that may have pinned too many hopes and expectations on market share and leadership, he said.

"Companies get into trouble when they've disconnected from their brands, and it's often difficult to help them understand that to maintain leadership, they just can't sit there. They've got to change," Mr. Trout added.

CONTINUAL TINKERING

Mr. Golder's study may actually help fuel the determination of many companies, especially those riding the wave of the Internet, to keep pushing for continual tinkering with their Web site and merchandise and the customer experience.

"What this means is what we've all perhaps suspected over the years: That once you take your eye off the ball, for whatever reason, your product is not going to continue to be a success," said Jack Rooney, VP-marketing of online art site Guild.com.

Mr. Golder said he believes his study is of particular significance to investors, particularly those evaluating the prospects of the dot-coms, which "base their long-term prospects on attaining and keeping that category leadership," he said.

"They say they need to spend a lot on advertising, money that in many situations they're borrowing against future revenues, in order to capture that top spot, that that's what will guarantee them [staying power] for years to come," Mr. Golder said. "But I have serious doubts about that."

Ultimately, brand equity resides in long-term customer experience with the brand, not necessarily the advertising campaign of the moment, he said.

RETAIN EQUITY

"Regardless of how strong a brand is, unless it remains strong to each customer and is reinforced by user experience, equity is going to be eroded over time. Certainly, this shouldn't stop marketers from striving to be No. 1.

"Market leadership should still be a goal of companies, because there are many benefits that go along with being a market leader," Mr. Golder said. "The implication is the sources of maintaining that leadership is more dynamic, not stable. If the brand is treated as a static source of advantage, that leadership can be fleeting. The brand is only one way of maintaining leadership. The dynamic factors make a difference over time."